The National Board of Revenue (NBR) is preparing to remove restrictions that prevent non-bonded garment exporters from sourcing raw materials locally through back-to-back letters of credit (LCs).
Once implemented, the policy will allow non-bonded exporters to purchase inputs from bonded deemed exporters using back-to-back LCs, improving access to materials and simplifying export procedures.
According to NBR officials, the proposal has already been sent to the finance ministry for approval as part of a legal amendment. After approval, the VAT Policy Division and Customs Bond Wing will issue official guidelines for implementation.The change is expected to benefit more than 1,100 garment factories, which currently export around $6.5 billion annually and employ nearly 700,000 workers.
Industry leaders have long demanded this reform, saying the existing policy forces many factories to buy raw materials in cash at higher prices and creates complications during export clearance and VAT audits.
To prevent misuse, NBR plans to introduce automation and integrated digital monitoring, linking systems such as e-VAT and the Customs Bond Management System to track transactions and exports.
Exporters believe the initiative will significantly improve the ease of doing business in Bangladesh’s RMG sector, particularly for small and medium-sized factories that struggle to obtain bonded warehouse licences.
